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Hi, I'm Shelley Kane, in case you haven't been to class lately. I wanted to go through a problem in case we might get snow today.
Or maybe you've been out or maybe you just wanted a little bit of extra practice.
I thought I would take a problem that is similar to the one that we have been doing in class and put it together in the way we have been doing in class.
What three statements are we trying to do?
The Income Statement, The Statement of Stockholders' Equity and the Balance Sheet.
We're going to skip the Statement of Cash flows until the end and that will just sum up everything then.
But I would like to see if I could do one and then I would be right here if you need me, or I will be right here in my kitchen.
So, I put this information that goes with this on blackboard, that is SK's consulting service
I sold stock to all of you and you remember you were so willing to help me start my business.
So I put a bunch of numbers out there and you can see if you can do that just like we did in class and you can put them on the statements.
Remember, each account only goes on one statement, once, and unless you calculate it differently, it will NOT appear again on a different statement.
Does that make sense?
Let's put together the Income Statement first. Now, why do we need an Income statement?
OK....I am waiting for you to tell me..
Do you think it is important? IT IS EXTREMELY IMPORTANT. I really want to know if my business is making any profit.
Not just cash, but profit, or I won't do it if I am not.
So I am going to put that together for my readers: you, you bought into my company and I would expect that you would want to know how well our company is doing.
So taking the information from blackboard that I gave you, let's see if we can put the statement / information together.
I put an easel together that looks like my writing in class. So, it is SK's Accounting Service
So you always want to do these three lines for the heading, really critical to put the right heading.
It won't tell your readers much if you don't. This is the Business name, this is the name of the Statement and the date line.
If you left the date line off and you picked up a statement, you would not know what you are reading.
We're reading for the whole year, year ending whatever, and that is really different from the Balance Sheet.
That is the first step..
The first line is going to be called--Revenue. In this case, it is Consulting Revenue.
That is what I am in the business to do.
That is sales, Sales.
Then I am going to gather all my expenses and see if I can make a profit
So why don't you try that? Go ahead.